Oneshot: Market Uncertainty, AI Valuations, and Crypto’s Path Forward | Roundup

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But I think the the meme that was nothing ever happens has turned into everything is happening all at once all the time. >> Nothing said on one shot is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Michael, Vance, and our guests may hold positions in the company's funds or projects discussed. >> What's up And we're back.

>> We're back. Welcome back to OneShot, the bi-weekly podcast that has turned into a weekly podcast because there's um >> hold ourselves to the standard of weekly bi-weekly. We'll we'll we will uh have things to report on as they happen. We will have subjects. >> We'll break news. Uh we will have guests as they have relevant things to talk about and and updates themselves. We we're we're going to be free form and not not film making there's no bounds this podcast. Uh but I think the the meme that was nothing ever happens has turned into everything is happening all at once all the time. Uh especially with the geopolitical conflicts going on. I

don't think we are going to espouse any personal views on like if this is a good or bad thing. I think it is what it is and we'll play the hand that we're dealt. Um, but it is quite the weak in macro oil that you know was literally everyone remembers when it spiked to 120 during the Ukraine war. And I actually got that wrong, Michael. It was like basically right as it happened first like three months. Um, that spike and it went to 50, you know, as of like a month ago or I guess two weeks ago and now it's back at 100. Um, it seems like it's max political uh, you know, violence on both sides.

It's it's you know the straight is being mined or or maybe not depending on you know which news report you get. Um but there's a lot going on. >> Yep. We're at 965 as of Thursday. >> Are you checking on Hyperlid or what are you checking on? >> WTI uh crude spot on uh uh I don't know who. Yeah, just the the spot market um on Trading View. But you know it is uh it's interesting. I think the the big question now is sort of like what happens in the straight. Um seeing photos of people posts from Dubai at night of just like the tankers that are lined up. Um also seeing all kinds of fake news and fake videos of like things

catching on fire and things getting bombed out. It's just like no these thank god we have Brock on on X to just you know it's true. >> Tell us whether or not this is a real thing. Um don't need to go too deep. um on you know what happened on Sunday night uh what happened on Monday uh it's now Thursday things to have things seem to have quelled a bit uh but the spike from like 80 to 120 back down to 80 or 90 um was a violent move um and it seems like um what has been notable especially as it relates to what we usually talk about is a lot of this was happening um on Hyperlid and a lot of it I

when you have these liquid markets for non-crypto assets built on a crypto platform that trades 247 there's with perpetuals there there's just a lot of room for this stuff to to move um wildly and one of the things that I we we've talked about internally is just like what happens if we're moving to a world that has much more volatile markets um where it's it it is not uncommon to see large cap companies plus or minus 10 to 20 to 30%. You know, hundreds of billions of dollars, trillion dollar companies move on on that type of news. And we're in the middle of a regime change, I'd say, in terms of the stock market. But now

you're starting to see things like oil uh or commodities move in those those directions, which is it is very uncommon for that type of stuff to happen. Um yes, it's Ukraine war, yes, it's Iran war type events. Uh, but I I generally think especially as we have many different new trading venues that are 247, um, you're going to start to see more volatile um, and interesting ways to play different markets that will lead to more activity. Um, but yeah, one of the big winners here, I think, out of all of this is hype. Um, and you're starting to see it now hit all-time highs in terms of BTC, ETH, and Soul.

So, that ratio is now at all-time highs. Uh, I think the the token itself is somewhere around the 36 37. Um but it just seems to be that you know HIP 3 with these different markets and um some of the off uh non-crypto assets are really exciting and it's it's positive to see from a crypto perspective. Now obviously the whole war and everything um who knows kind of uh where this leads. I I've heard so many different takes. now probably not um you incumbent upon us to to give our perspective or regurgitation of any of those takes. Um it just is what it is right now. Uh but I I will say I think just given the nature of where we are in a midterm year

in in the political sphere. um this stuff probably ends or or at least gets declared ended uh sooner rather than later because there's just a political gravitational force to to stop this, you know, soon. Um and now you've got I can't remember how many barrels, but it's a ton of barrels out of the SPR um that are that are getting, you know, unloaded to keep oil prices down or at least attempt to keep oil prices down. There's now eight states where diesel is over five bucks and I think California has over six. Um so you're starting to see these these effects you know affect the pump or affect the prices at the pump um which will have direct effect on uh you know downstream. This is what

happened last time. This is why everybody's freaking out. It's like um you have people who are scared that high oil or energy prices lead to future inflation which is what happened last time a couple years ago. Um and so yeah, I think that that is kind of where people are are now like in this um riskoff perspective. Um so that that's kind of my read of the market. Um exciting stuff for crypto. Un unsure on everything else. Um but taking it day by day, week by week.

>> Yep. Yeah. I saw I mean it's it's it's possible that if oil goes to like 150, we see doubledigit prices at the pumps. 10 bucks a gallon, which would I don't know. I was looking I was feeling on my car last night. I don't know where another number would go on that board. Like they may have to like literally tape a one or something. Uh you know, the good news this time around is that the uh fracking in the US has really me meant that the US is now a net exporter of a lot of energy. Um there does seem to be some sort of resilience built up with these stock piles and the ability to release them. But uh if this goes longer than 20 30 days like that release is is you know

null and void. So we we will see. But I I think generally speaking what you're seeing in crypto markets is things that have connections to real world assets. HIPS 3 is an example of that do really well. Sky is at all-time highs for supply of USDS. Um, so there are some safe havens and then the stock market seems to be I mean the indices are still pretty much at the all-time highs. Maybe that's changed today, but um under the surface there's just a ton of regime change. The software companies are down.

I was looking at an insure techch provider today. They're down 60%. Not for any really good reason just because AI is kind of coming for all of them. And then you know you have these AI companies which are private which kind of exist like offscreen. You can't see any of their financials. you don't get any updates except for like when they forecast ARR and um those are going public apparently and you know maybe we talk about the IPOs and and I think the first one is in June allegedly um SpaceX is going to go public in June at 1.75 trillion and raise 50 billion like that will be a huge test of this market and I was just looking at uh I was asking chat GBT last night like what were the IPOs in in 2001 you know right around the start of the first Iraq war and obvious

there weren't many, right? Like, and that was probably like a an order of magnitude more chaos or maybe 50%, but these things uh these things, you know, ripple across all capital markets, both private and public. I'm not I'm not sure if that's necessarily like a fair comp, per se. Um, just the Iraq war. I I think what was going on in in 2001 was, you know, the the bottom of the NASDAQ, right? and 2000 being the end of of that. Um, but I will say I think the to your point, the bigger question here is can you have a $ 1.7 trillion IPO followed by a billion trillion dollar IPO

followed by a half a trillion dollar IPO followed by it's just like where where does the where does the capital get sourced from? I like I that that I think is the bigger kind of structural question. Um, and I I still think that there's going to be a lot of people who are like, "Oh, this is the this is the single asset that I own to have like exposure to Elon Musk." And that I think is a very positive pitch. Uh, especially if you can pair things like XAI, SpaceX, and potentially, you know, well, obviously Twitter as well, but but um, who knows what's going to happen with Tesla. I mean it would be a really interesting reverse takeover private public uh transaction but I I think yeah the the

the bigger point at least from what you just said I think is like the quantum of capital required you know is still a TBD um for for what happened this year. >> Yep. And um you know there is the alternative that these companies stay public uh or sorry stay private for longer. Um you know the Middle East and and all of member countries uh are huge financeers of of private companies and I've seen a couple of reports about you know maybe they're going to be pulling back maybe they're going to be doubling down. I think for the time being uh while the oil is not flowing probably on pause and so like that capital is really smart. It's really agile. Uh it's fast but I think that's just slowed down by

all of this as well. And so I think they're in a position where some of these companies probably need to go public. I don't think SpaceX is in that camp. I think they're profitable so they can kind of maybe you know if it doesn't look good they pull last minute. Um OpenAI has 110. You know Anthropic has 30 I guess they raise. So they have time, but I think a base case is that a lot of these private companies are going to be public in 2027. And you know there's there's a lot of them now and they're all worth like you know 5 10 billion. There's the Neolabs, there's the robotics Neolabs, there's the even Replet yesterday raised 400 million at 9 billion. Um and that was led by a Canadian venture capital firm I'd never heard of. Like it's it's starting to get

more disperse. um which if you remember kind of the buildup of all the private tokens that were supposed to launch at these super high valuations. It kind of reminds me of that a little bit. There's more fundamentals in these businesses obviously. >> Well, yeah. So, the I don't know if this is a full subject change, but I think that there's it's worth talking about what I would broadly dub like the the bubble forming in private VC land. um which feels like we're every week it feels like we're hitting a new new kind of all-time high for that that spidey sense tingling a little bit. Um but then it just gets surpassed by the next week and hitting a new all-time high for even more tingling feeling. Um, yeah, this week it's it's you've got basically

every company that has a a native AI business model or product that is hitting tens of millions of ARR and growing rapidly has a multi-billion dollar valuation. Historically, this multi-billion dollar valuation would be something that is required once you hit probably like 50 75 100 million of ARR. And what is different and what is what is fair to call out is that the growth rates are materially different than what you saw with enterprise SAS and they're they're hitting these numbers not in years but in potentially quarters and sometimes months and and so that I think is where you get you know extrapolation comes into play and and you can start to say okay well if we're hitting you know

0 to 20 in 6 months and then 20 to 75 in 3 months we can we can say that we'll be hitting 500 to a billion if we assume that these markets for AI dominated services are as big as a lot of people think that they are. But you're going to start to see these these private public dislodging mismatches where you've got the publicly traded entity which is getting beaten down. You know, look at Figma. It's down 80% from an IPO or or I don't know where it is today, but broadly speaking, it's now like 80% down from its IPO uh or or peak. Um, and then it's also got private market, you know, companies that are that are performing

at higher valuations. It's just that they don't trade in public markets, so they don't have the the same effect. You know, if they were public, it' be a different story. And I think this comes down to sort of the incentive model. And and it's worth calling out. We've talked about it, you know, multiple times over the last few years, but just to call this out. When you are a venture firm, there's two things that you get. um typically and it's usually a management fee and some sort of performance fee. The management fee for a 10-year fund or potentially even longer is typically 2%. In some cases, it'll be 2% over a period of time and then a step down to like 1% over the next period of time. But you're getting paid basically to manage this capital. But what that really means is that you're getting paid to deploy that

capital and then you're getting paid another fund in two to three years to raise that and then deploy that as well. and and in many cases like I I have seen a few even early stage funds that are in this cycle um deploying capital probably in like a year's time uh or or less um and they're they're you know actively looking to raise their fund because they've already passed that 70% deployment threshold and I think in many of these other cases it's just a dislodge or or it's just a it's a misinccentive alignment. Um, let let me let me let me give like a like a Figma bullc case and then talk through maybe

some of what I think is happening. So, Figma, just to put numbers to what you were saying, they do about 4 billion a year. They're growing 45% per year in revenue. Uh, the gross margins are pretty good. I think they're like 40% 50%. Um, and I and I think the business is actually pretty levered to the AI like what the AI promises. In my mind, the promise of AI is not making the 10x engineer and a thousandx engineer. Maybe that's part of it, but I think the broader market for this is like making people who can't code able to build websites, able to build applications.

Um, and so when you see something like replet worth 9 billion and then you see something worth like and and there's they he went on a podcast on TBNN and said he didn't track AR as a metric. It's not a useful metric. Obviously, the public markets don't feel that way. But, um, with Figma, you know, it's only worth 15, 16, 17, and they have 4x as much revenue allegedly as as Replet, even if they're at a billion. So, there's some sort of mismatch happening here. And I think, you know, your point earlier was like people just think these markets are 10 times, 100 times larger than we can expect. I think that certainly could be possible. I think the other thing that could be happening is just kind of like some of the cardinal sins of last cycle and and even this cycle with crypto has been the

extrapolation at the top to the rest of the you know the year the decade what have you. Um if you think about people with using cloud code or even the Mac mini crew um there's a lot of upfront spend because it can feel very productive to start a business but then those people churn you know if most of the revenue or some of the revenue of these things is you know from these startups that have six months of runway left or um you know the investors that are investing into these companies or forecasting the revenue based on those startups like that's where you really get into trouble and these companies are probably you know anthropic And I would say maybe open AI are worth more than they are today in the fullness of time.

But I think there's this question that's starting to arise around like what how what is ARR like how do you define revenue quality? >> So so here here's what I'll say and I I this is probably the best comp to Figma and if you got the Figma numbers I've got the lovable numbers but Lovable which is actually a Swedish company is basically Figma but AI native in a lot of senses. It's sort of like speak whatever you want built and then it'll make it for you. Um whereas Figma is sort of a design tool maybe like a it's more of a competitor to like the Photoshop Adobe creative suite um which is more web- based and that's where it started and and just made it easier and more accessible than these kind of like heavy tools like creative suite and and

so I think there is an element of can Dylan and Figma you know go AI native after they've already built this user base this customer base this product and then convert it into something that is AI equipped or AI native or is it going to be something new like lovable which is starting from an AI native perspective but having the same outcome like my sister-in-law was talking about how she's organizing a bridesmaid or um um bachelorette um and she just went into lovable and like made you know little posters and little invites little thing and it's like the stuff that would be kind of like hard to do or just like take you an afternoon on a Sunday to to build is just like a prompt and that is it and it's just like lovable and you're

done And you know, I know all kinds of people who are like making websites with it and like it it's just you've got all different types of creative outlet or creative product outlet uh capabilities that you know, Lovable is is excited um and is definitely growing um quite a bit. And so that I think is the comp which is they just raised at a $6.6 billion valuation not too long ago. what they um said yesterday is that in the last month they went from 300 million ARR to 400 million. So it's growing 30% month over month whereas Figma is growing 45% year-over-year. Obviously it's at a much higher base but the the CEO is saying well we're at 400 million

AR right now. We are forecasting to have a billion in ARR by the end of this year. And so that growth rate is where people are just like it's a feeding frenzy in the public in the private markets and and that is I think the comp where let's say they raised at a 300 million ARR 6.6 billion uh valuation that that's a it's a pretty you know healthy uh 20x multiple on that whereas Figma is what a 4 billion ARR at what valuation like 15 >> 15 today. Yeah. So, a 3x and that that's the difference right there. And you can justify some of that difference I think

when when you're looking at growth rates and it's basically like uh I don't even know what the irr of or the of that growth rate would be on communityized basis, but when you're growing 35% month over month versus 45% year-over-year, that is a very very large difference. Um it's just whether or not you can keep that up to your point on like um multiplying the average daily revenue by 365 is is never going to be a fair way of doing it. >> No. And and you know I guess the question for like you know your your sister-in-law is like how many more websites is she going to create this year? Is she going to keep that subscription? Is it going to be something that's enduring? And I think one of the things about um the private markets which is you know not only do

you have a I mean there's some sort of premium or discount around eli liquidity I guess it's a premium today uh but you know over the life cycle of these companies in the private markets they do take on more dilution and and there is stockbased comp in the public markets as well but it's generally lower than like you know another 10% round another 20% round you're just eating that and so I think those two concepts um at least in my mind should at least theoretically imply that the public markets have a premium to the private markets is not what's happening right now. Um, and then the other thing that I would say is, you know, having a stock that's fully unlocked. So, so Figma, I think went public last summer and then fully unlocked everyone. So, like in in public equities land, they do the unlock I

think six months or the or the second earnings date. Um, and so everyone can sell. Everyone is is free to sell. Uh, I think Figma had a really, really, really good cap table of like people like Sequoia who actually bought more in the open market. First time I've ever seen them do that. Uh, but these private companies as they go public, they will have to unlock and like even something like Cororeweave is still dealing with Magnetar selling on a daily basis. So there's there's no free lunch in terms of like who you share the cap table with on these private companies or the dilution that you have to take on to get it public.

>> Well, yeah. And so I think maybe like distilling this whole thing down there, let's say there's a 3x revenue multiple for public markets right now. >> Yep. >> And it's not a fair comp because obviously they've got bigger bases, growth rate, all of that. But then it's a 20x multiple on the private markets for for generally I would say like a similar uh product category but different approach which is like an AI native versus a software native uh approach. And I think that there's also going to be a question as to and this is a conversation that we have with portfolio founders. Um there there's a question as to go forward organizational debt or or cost structure that is imbued within this and I don't even know how

many employees but I know it's thousands of employees are at Fidma and I know that there's not there's probably tens of employees at lovable. If you have an AI native organization that is able to build uh these tools and have the go to go to market uh distribution all the support that starts to get automated you're also able to say not just from a topline perspective your growth rate is is a different you know comp but your bottom line is also going to be a different comp because if you're AI native as an organization not just as a product you're going to have an advantage there as well and so I think there's a lot of things that are just making people more excited about like this transition is transition new new products in the same categories.

So we know that the market is there but a new product that is differentiated versus like something that previously existed or previously you know is the next generational shift. And the sister-in-law is not you know it's not really a question as to like how many more bachelorettees is she planning this year. It's more a question of like >> better be better be once a month if they're counting it as a >> well right fair but but the bigger question is she didn't have a Figma subscription beforehand and she definitely didn't have a creative suite subscription beforehand but now she's using level and so are there more places where you would be able to plug in uh because this product is an easier user experience or easier onboarding experience so a lot of a lot of really big questions I mean these are like this

is why things are kind of in like a wait and see old uh risk off perspective right now where the SAS selloff was the last couple of weeks, couple of months. Now it's sort of like a I don't know. We'll we'll see kind of how these things play out. Um but but I do think one of the interesting comps here as a as a maybe potential uh transition is thinking about public versus private. And this week we actually saw for I think one of the first times at least you know notable uh first times across protocol which is has a publicly traded complicated token um decided that they were going to take their token and and take it private and um no it was not done at 420 a token but it should have

been um >> and I think it should be uh notable in that they not only said we're going to take it private basically had a step up uh price from where it was trading over a 30-day T-W. Um but and it it obviously it traded up to that price basically immediately, but it also surpassed that price by about 40%. And it is a pretty substantial premium to where they said the take private price was, which probably suggests that some of these assets in both crypto, but also public equities land are are just beaten down so hard right now that you'd rather have a private asset. And I think that there's a lot that we can glean from that. Um, but there there's some

really interesting takeaways, which is you don't have the the structured selling on a on a given basis. Um, and there's a lot of people, especially in crypto, that are are just down so bad that they're just like every single day they get liquidity. They're just selling a little bit because they need to. And so maybe in the private markets that that improves and you can stop that. Um, but number two, it's when you don't have to be beholden to public token holders or public shareholders every single day, every single month or quarter, you're able to do things like we're talking about from an organizational perspective that allow you to kind of become an AI native, you know, company and and maybe that means like going through restructuring of the organization. Um, so there I I find this to be an

interesting kind of comp uh to what's going on in cryptoland as well. and and all the reason why I say this is I don't think that cross is going to be the only one to do this. I think there's gonna be a lot a lot of others. >> Yeah. I I think um we've been spending most of our time and and frankly most of our capital in the public markets probably for a long you know a year now. Um still doing the you know the series A's and the seeds that we think are interesting but it's slower the prices are higher. um there's generally a lot more competition for those types of things. And um there's no doubt everyone feels amazing about their privately held tech company shares, defense shares, what have you. Uh and the marktomarket volatility is not just like a feature or

a bug of the asset. I think it is something that freaks people out that are running these companies because they're like, "Wait, I have to check my stock price every every day." Um eventually there is no free lunch. You do have to go public or or get bought. Um, and maybe getting bought is kind of more of where these AI companies end up, but I think there's a ton of value in the public markets and we're excited about a lot of stuff and people probably saw the better announcement this week. We don't have a ton to say on that and you know there's more forthcoming, but there's a lot of value out there and it's exciting. Um I do think on the crypto side uh the stuff that we've been paying attention to is I mean Sailor seems to have discovered something and and STRC um which is the product that uh

Micro Strategy issues that a that is a perpetual preferred um equity instrument. It pays 11 and a half% um it isn't debt so so you are on the equity side of the cap table here. Um, but they found a lot of interest for this and they're selling I think what what are they selling yesterday? Like 184 million 200 million of this, >> right? So m maybe uh you have the site. >> Yeah. Well, it's strc.live um is the website. Um and it we're kind of doing a deep dive in in into this itself uh right now to see how they're getting this data or if

this data is accurate. So like TVD, we could be promoting something that has like >> be a lovable bachelorette party invite, >> not uh not accurate ATM sales data. Um but and it's independent so it can't be affiliated with strategy or or the product itself but but the basics are and so to talk about this product um the the basics are it's a uh it's a preferred share and so you are on the equity side but you're also ahead of common and you're you're you know there is some I would say if you believe that the price of Bitcoin stays above some threshold and by some threshold I mean like $10,000 um for a long period of time, then you're going to be basically backstopped

by Bitcoin. And what they're make making a bet on is that this 11 a.5% is lower than the average return that you would get over the period of time that you're holding this asset, then what Bitcoin performance will be over that same period of time. And so they say, okay, if the average growth rate per year of Bitcoin is 30%. Uh or or they forecast that out going forward, it's 30%. If we're selling basically cash at 11 and a half% like that's an accretive transaction to us because we're going to take the cash that we raise from this product and put it directly into Bitcoin which is going to earn us 30% plus um and what so if you trust in Bitcoin if you trust in their ability to continue to raise there there are some other

features where um they have the cash on the balance sheet for two and a half years worth of payments. And so part of part of the balance here is like over the next two and a half years, even if they had zero sales, you're you're still going to receive those those cash payments. Um it's also um it is it trades on the NASDAQ and and basically par is $99.99 and if it trades above they can sell ATM. If it trades below it, it definitely they don't do ATM. But if it goes below $99, and it has traded in the mid90s earlier this year when it was still getting launched, I'd say now it's kind of like hitting its real launch um after they had their their meeting in in

uh Vegas uh earlier this week or last week. But all this is to say that the the yield will go up if there are um prices that hit below certain thresholds. They also have the ability to reduce the yield if it's above certain thresholds. So like let's say Fed funds rate gets reduced, they can reduce it the same amount as the Fed funds rate on that on that month. They can also only reduce it 0.25% per month. Um whereas they can increase it more than they can reduce it. And so you're at least protected from like you know over the next x number of months it's going to be in some general frame.

Um and it's a very highly liquid asset. um if you wanted to sell the assets itself, you you should absolutely do that. The the other thing I would say is um for US investors and this is a structure that is is um common in REIT type products uh or or property type products where the distributions are not actually considered interest payments which would be taxed at ordinary income. They're actually considered deferred return on capital. And so what this means is that when you have 11.5% yield, instead of having to pay taxes on that 11 12%, you don't actually pay any taxes, you defer those taxes until you sell the

underlying. And so let's say you have an 11 12% gain. You can capitalize effectively capitalize the yield on that asset until you sell the shares. And so it would be like you you bought it for 100. Let's say you earn 10%. That means that it would basically be like you selling the asset for 90 and then realizing the gain on sale which is a capital gain on the underlying asset itself as opposed to the 10% that you earned over the hold period. So what this means actually is that you could have long-term capital gains but also even if you had short-term capital gains those can net against capital losses where whereas ordinary income or interest payments

cannot. And so this becomes a pretty advantaged product that is post tax 11 a.5%. which you can assume like Bit is another product um that has and you know they have their own issues but it's it's a REIT product that's pretty popular where it has it targets a 5% cash on cash return but it has the same uh return on capital uh components which defer the tax and so it promotes itself as being a like seven and a half or 8% you know yield uh uh pre-tax product whereas whereas it's really 5% post tax.

So, this is like I I I'm starting to see where Sailor is talking about with his like this is the iPhone moment. And just as context, um, >> no, you didn't build anything, Sailor. >> Well, right. They're selling financial products, but this financial product is pretty attractive. Um, I I don't own any. We don't own any. like this this is something that we're just kind of discovering today so we're talking about it but just as context at least if this data is accurate strc.live live is the website to track this. And it's super it's super interesting because it's real time, but it assumes that they have accumulated 4,000 almost 4,000 BTC today. Yesterday they did

2,000. And so if they're if they're yielding, let's say, one to two to maybe 3,000 on average 2,000 per trading day, that means that in 50 days they will hit a 100,000. 50 trading days. So that's 10 weeks. That means that you get basically 100,000, half a percent of Bitcoin every 10 weeks at current prices. Um, so this is like a fundamental unlock. And I I feel like people are just now kind of starting to get their head around what this product is, how it works. Uh, you're starting to see the dividends um for people who hold it. And you're also starting to see these these announcements of these companies adding them add adding it to their uh treasury

balance sheet. to like Anchorage said that they're going to buy some and hold it on their treasury balance sheet. Uh I think there's a number of DATs that have said this as well like Strive. Um and and so this is just becoming kind of like why would you want to hold your your assets in money markets and yes there's a riskreward and yes like this stuff >> why hold bills when you give it to Sailor. No, I I look I agree with you. I I also do think that even if Bitcoin went down to even like 10K, he would still be money good on this for a number of years and he'd have to restructure it. But like kudos to him. It's not an iPhone, but he's developed something that allows him to buy a lot of Bitcoin and and maybe you know maybe they're sewing the seeds

of a recovery here for BTC. Well, and so this is this is going to be my next point too. It's like we're starting to see what what we are looking for broadly as an industry like are we've been asking this internally like what are what's the positive narrative that pulls things out. Um and I I think not to get too ahead of ourselves but to stay on the subject I I think that there's a couple of potential things that are really interesting right now in crypto. Um but my guess is that you know of the categories that can build a new narrative that pull us out. It's there's basically three options. There's um and this is probably in order of like most likely to or least likely to most likely um something in the crypto AI space that

just takes off and and this is some sort of product either it's a decentralized you know model running network or it's a decentralized compute network or it's something that has to do with you know the true intersection of crypto and AI um that launches and kind of builds you know itself as you know a really interesting new category and and kind establishes crypto as fundamentally connected to the AI space which is already booming. The second category I'd say broadly is onchain capital markets which it's it's DeFi but it's it's lending it's you know you're starting to see like we said all-time highs for Sky TVL um you start to see a lot more capital move in um from the stable coins. Uh there was a great chart which

is like if you look at the total amount of stable coins in the last uh cycle which you know let's say we're in the bare the deep the depths of the bear right now basically stable coin volume went down like 40%. Well, stablecoin TVL onchain is is staying flat. And so, if anything, the comparison with last cycle is this is like a fundamentally better situation to be in. And as we assume a more bullish perspective, things will continue to take off. But the third category, which I think is le most likely, is that it's going to be some macro narrative around BTC and probably ETH that really drive everything, you know, up and then price begets narrative price and that takes over. And so what we've been trying to see is what are the green shoots that we can point to on the

macro side of crypto and STRC honestly is is the most green shoot thing that I have seen in the last probably month or two basically from the start of the year. Um which is just like a really positive take um and something that if we continue to see this type of activity and sales um I think could be something that drives a lot a lot back into crypto pretty quick. >> Yeah, I mean remain bullish on on Bitcoin on ETH. I think there's enough dry powder there and enough buying action from the main DATs uh followed by ETF flows that any sustained recovery will be chased. I think a lot of people are short too. Like you you saw that with a lot of these DATs which are now like kind of buying puts, selling calls, trying to monetize, but if they're not

tracking their underlying asset, they do have to buy that back. So I would assume a lot of them are kind of hedged right now on this conflict. But if it were to resolve and who knows if that's likely to happen, uh that will be good. I think the other kind of macro stuff that I think about is I think a marginal cooling off without totally blowing up the AI trade is good. Like it's just been such easy money for so long to just like buy the data centers or you know do like a triple layered SPV that if it gets a little shaky I think that's actually positive. And then I think the last thing on the macro side is just lower interest rates and and Trump actually while we've been speaking called for an emergency cut. Get to the get to the levers and start start doing

whatever. I don't think they're going to cut maybe at all this year. It kind of it kind of depends. Like I do think, you know, home buying rates go down just because they're buying a lot of MBS, but the Fed funds rate like kind of who knows. Um what else do we got here? >> Should we talk data centers because you just mentioned it? >> Yeah, I mean data centers is something that candidly we own a significant amount of. Um, and a lot of these we initially were introduced to through the bankruptcies of some of these assets.

Um, notably Core Scientific. Um, Iron never went bankrupt, but you know, they were an old Bitcoin miner as well. And they were just kind of Johnny on the spot, ready with power shelled, hooked up, ready to go with GPUs. And these things, it's been incredible to watch how they've turned around. They've kind of sold off over the past six months as the AI trade has cooled in the public markets. Um, but they're using Bitcoin to finance, you know, buying these GPUs. They're then swapping out the Bitcoin monitors for the GPUs and renting these out. Um, it's all very fascinating. I think there's a really, uh, strong bull case here. The thing that I get nervous about is just like, can you run these models on a phone? Does edge compute meaningfully disintermediate these data

centers? Um, and then there's like the science angle of like what if they invented a new X and then you know we don't need all the like kind of like the fiber argument. Maybe maybe not quite as apt, but yeah, that that's kind of my take. I I still am very bullish on these things knowing that we will need a thousandx more compute to get to AGI. Just the financing of them is really tough. And I think that's actually where crypto and USDA is playing a role. And apparently, you know, people at these large companies, including Nvidia, have heard of USDA and they're very bullish on it. Um, they're looking for more large checks that can be written and stable coins are one of the logical, you know, I guess like 13 figure pools of capital that you can tap. Maybe to go back a little bit, um, one of the

reasons why Bitcoin miners, you know, have such a advantageous position is because they're already approved for electrical hookup to the utilities. And the thing that is becoming clear and and Sashia talks about this basically everyone at Google, Microsoft, Amazon, you know, the hyperscalers, but also now some of the neo clouds is that if you don't have grid connected power, you're not able to get it in the next probably five years. Um and and so if you think about it, it's basically there there's a couple of components. There's like energy, there's land, and then there's the GPUs or kind of the the um equipment itself. Um the land I think you know is relatively pretty cheap uh so long as you have access to the things that you

would need. The energy is just hard. It's not super expensive. It's about like somewhere between 5 and 10% of the operating expenses of the data center is energy. Um but if you don't have it, you can't turn it on and and so it's this like not that expensive once you have it, but once you if you don't have it, then you're in line and it's 5 years to get hooked up to most of the utilities. And so what people like Elon and XAI are doing or even Amazon and Microsoft now are are partnering with off-grid or behind the meter type energy sources whether this is gas turbine also to get a new gas turbine uh it's a multi-year weight. Um so it in the case of XAI he put the uh what is it the macro hard um

uh whatever that uh roof whatever he's calling it um the data center that has like a gigawatt of power. He put that right next to a defunct natural gas uh refiner or turbine um or or uh power plant has restarted it and using that to power it. You've got uh Amazon partnered to buy half of the power from a nuclear power plant in the Pennsylvania Sesuana uh region. I don't think that that's turned on yet. Um but that's how they're moving and that's the direction they're moving. And then Microsoft last year announced that they're restarting ThreeMile Island nuclear power plant and paying $20 billion to do so that they can have that be their power source.

Power is just exceedingly important. And people talk about having solar. Solar doesn't have the base load effects. You only get about 5 hours of solar per day uh in even in the most sunny environments just based on the way that it absorbs energy. And you you so you basically have to have power. The only things that already had power uh are the Bitcoin miners because they've been plugged in for the last few years and they've been upgrading their services. It's now just this relative trade-off of how much can you get per megawatt, how much revenue can you get per megawatt.

If you're doing Bitcoin mining, right now it's the mining economics are terrible with Bitcoin at 70K, but you can start to move towards other, you know, high more high-profile uh recurring AI data center type opportunities. And then to your point, how do you finance the GPU purchases or even the the rebuilding of the shells to be able to house these GPUs is kind of the big question that a lot of these, you know, Bitcoin miners are going through. And and so I the bet is basically that you think that we need more GPUs uh more more gigawatts of compute and if you look at any of these you know Oracle forecasts Microsoft forecast we need to like triple the amount of AI data center compute capacity over the next couple of years

the only way to do that is to power basically every single powered megawatt with AI GPU compute. We're also starting to see more inference demand take off which doesn't require this liquid cooled um you know GB300 Vera Rubin um type you know operation uh to do pre-training or post- training but you can start to have some of the air cooled GPUs process the inference and so it it is I'd say one of the most fascinating places right now just in the in the value stack in terms of you you don't need to take any bets on these products or categories as you know an investor into any of these categories taking off.

You don't have to put in, you know, $100 million into the $10 billion round or the $9 billion round for Replet and hope that they can pull off, you know, some some miracle. You can buy these that are further up the value stack that are going to be applicable to basically everything. And a lot of these trade in public markets, but I I think the question is, and yes, there are kind of like tail risk questions like are we going to create a model that doesn't require as much compute? That's what Deep Seek was basically like a year or so ago. It's like, oh, we don't actually need that much. Okay, it calls into question the entire thesis. Are we going to have edge compute and is it going to be like Microsoft or Mac minis who are going to be doing most of most of the

inference demand? And I think that that completely remains to be seen as well. Um, or or is it going to be something that over the next five years is one of the most successful categories within AI and and TBD on the rest of it? And so I I think kind of the question that we think about or that I I at least think about is where is this going to play in in the you know general AI narrative right now. It seems like there's just a lot of once again risk off people are like okay I'm going to wait to see more information. Um some of these things I think are going to be building out over the course of 2026. Let's let's wait and see. Um, but I would say broadly like this is probably going to be the the biggest category at least in the public

markets for AI until these foundational model companies go public and it's an attractive place to be. And if you're a private company, there's no information needed. It's just great. One's feeling very good. And I actually got hit up yesterday with an SPV for um I'm not going to say which deal, but it's it's one of the ones that just got announced. just a just a flat 3% management fee and then 15% carry. >> That's it. >> Not even I I've seen 10% upfront fees and then 10% carry.

>> It feels like it feels like the what's happening with like it feels like this is the first real cycle where everyone has discovered secondaries in Silicon Valley at at this scale. And it kind of reminds me of like when NFTTS were trading cuz like the the illquidity becomes a feature of the NFT. It's like it's worth what someone will pay for it. And like if you can get a bunch of people to buy an Ether Rock at $5 million per Well, it's like that's an amazing asset at that that market cap. It um it's going to be interesting. And the funds that are being raised are so massive. Like Spark um which is not historically like this large of a firm.

Like I think they're raising three billion. Um like everyone is Tiger Global size from last cycle and the startups are all like 10 billion this time. Maybe five, five to 10. Um, and I think where where our heads go is like maybe we should just wait for these things to IPO and like buy them when they're, you know, 50% 70% off. If that happens, maybe we might not be that lucky. But, um, I do think to wrap it all up because we got to hit it in a minute here. Um, seems like Sailor's discovered something. I would expect Tom Lee to follow suit. The rest of the Dats seem to be a [ __ ] show completely. Hype and Sky are looking good here. And then

Venture is slow, but >> there's other ones that are looking good. I would say >> there Syrup's looking good. Drive is looking good. >> There's there's revenue metas that I think are going to start taking off. >> Yeah. And within that sector, things are looking pretty good. Venture slow. And then we're kind of both just baffled by the feeding frenzy that's going on. >> Yeah, it it makes to Yeah. My my concluding thoughts are I think we're we're so far down on crypto that it we're we're going to start to see bottom.

>> Yeah. >> And things will come back very rapidly if we start to see kind of these green shoots become real potential staying uh with real potential staying power. Um, but the things that in our thesis is basically that the things that are going to come back that are not BTC, Ether, Soul, um, are the things that have a really strong business, a really strong revenue meta. Um, and you could look at that as Hype Pump. Um, you can look at that as Sky, you could look at that as, you know, basically all the all the assets on chain that are producing revenue in excess of their cost and and buying back their token. Um, those are going to be the things that outperform.

uh and the recognition of that and building more attention towards it will be um frankly something that moves very very rapidly but it I think will start with a macro move where people are offsides on bitcoin maybe it's drive who just accumulates like tens of thousands of BTC over the next couple of months and then people are like wait a second this is huge this is persistent this is now a new feature within the ecosystem um or or maybe it's something like we didn't mean to talk about it but like the black rockck staking ETH ETF launched today and that is I think >> off to a good start too.

>> It yeah according to Jim Seafford it seems to be off to a decent start. Um and we'll see what happens but there's going to be all these types of products that just kind of become new um you absorptions of assets uh that I think will become really really attractive and then the rest will follow. Um, and so I I think we're kind of at that stage where not many people are paying attention to crypto because there's too many shiny objects elsewhere and like multi-billion dollar valuations everywhere. Um, and yeah, it it is um something like a a ceasefire or an ending of the the conflict um I think will have a lot of people off sides and and that could be the basically catalyst to pull everything back out. Um, that would be my guess as to where things

move over the next couple of weeks or months. I mean, we're about to close here, but ETH is green on the day and like I sort the way I look at stocks, it's like I sort worst to best and like it's everything is red today. Um, so if you want something lowrisk, go get some T- bills. But, um, I I think some of this is starting to look attractive here. And and crypto always front runs. Remember that. It's always fun to make fun of crypto while it's crashing and then it's always not as fun when when you know the other industries follow suit. But I think we're looking good here. So, we'll call it there. Thank you everybody. See you maybe next week. This next peace.